Money Smarts 101: Asset Allocation

The video discusses the relationship between risk and investment, focusing on stocks and bonds. It introduces the concept of asset allocation, which involves dividing investments among different asset types to manage risk. The video advises young investors to consider stocks for long-term growth, given their historical performance. It emphasizes the importance of personal financial goals and risk tolerance in investment decisions. The video concludes by encouraging viewers to conduct further research and consult trusted adults for financial advice.

What is the relationship between risk and potential returns in investments?

• Lower risk usually means higher returns.

• Higher risk usually means higher returns.

• Risk and returns are unrelated.

• Higher risk usually means lower returns.

What is asset allocation?

• Dividing investments among different asset types.

• Investing all money in one type of asset.

• Investing only in stocks.

• Keeping all investments in cash.

Why might someone choose to invest more in bonds?

• Bonds offer higher returns than stocks.

• Bonds never lose value.

• Bonds are riskier than stocks.

• Bonds are generally safer than stocks.

What is a suggested strategy for young investors?

• Invest primarily in bonds for safety.

• Avoid investing in stocks due to risk.

• Focus on stocks for long-term growth.

• Keep all investments in cash.

What should young investors do before making investment decisions?

• Consult trusted adults and do personal research.

• Rely solely on advice from friends.

• Invest only in the stock market.

• Invest without any research.